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23 Apr 2015
BoE rate hike in November remains a possibility – ING
FXStreet (Barcelona) - James Knightley, Senior Economist at ING, comments that the MPC minutes offered a mildly hawkish take on the rate situation, and if the UK elections proceed smoothly a November hike by BoE can be expected.
Key Quotes
“The BoE noted that inflation “was likely to turn slightly negative briefly”, but that long term interest rates had fallen globally. Moreover, the BoE described market expectations for Bank Rate as “exceptionally flat”. This is interesting given that the minutes state that the economy can’t continue growing at its current pace without “generating greater inflation in wages and prices” unless there is a big improvement in productivity.”
“This appears to be a mildly more hawkish assessment from the Bank of England with two MPC members regarding the decision as “finely balanced” as to whether to tighten policy.”
“All members agreed “that it was more likely than not that Bank Rate would rise over the three year forecast period”. Were it not for election uncertainty we think that the market would be more convincingly looking for a rate rise this year.”
“Should the election proceed smoothly (or more smoothly than the market is anticipating) then we suspect a November move remains a distinct possibility.”
Key Quotes
“The BoE noted that inflation “was likely to turn slightly negative briefly”, but that long term interest rates had fallen globally. Moreover, the BoE described market expectations for Bank Rate as “exceptionally flat”. This is interesting given that the minutes state that the economy can’t continue growing at its current pace without “generating greater inflation in wages and prices” unless there is a big improvement in productivity.”
“This appears to be a mildly more hawkish assessment from the Bank of England with two MPC members regarding the decision as “finely balanced” as to whether to tighten policy.”
“All members agreed “that it was more likely than not that Bank Rate would rise over the three year forecast period”. Were it not for election uncertainty we think that the market would be more convincingly looking for a rate rise this year.”
“Should the election proceed smoothly (or more smoothly than the market is anticipating) then we suspect a November move remains a distinct possibility.”